SoundHound AI Inc. (NASDAQ: SOUN) has emerged as a powerhouse in the AI sector, outpacing the broader market with a remarkable year-to-date gain of 263%, leaving the S&P 500’s 25.8% growth far behind.
This impressive rally is fueled by the rising demand for its flagship solutions, SoundHound Chat AI and SoundHound Voice AI for customer service, which help businesses enhance customer engagement and streamline operations.
As of the latest trading, SoundHound’s stock stands at $7.56, with a 33% increase in just the past five days and a one-month gain of 45%.
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Technological advancements and expanding market reach
SoundHound’s Q3 performance surpassed Wall Street expectations, with an 89% revenue increase year-over-year.
Additionally, SoundHound’s strategic initiatives have resulted in a diversified revenue base, reducing dependence on its largest client from 72% to just 12%, a significant improvement showcasing enhanced stability.
SoundHound’s growth is fueled by both organic advancements and strategic acquisitions, including the recent purchase of conversational AI leader Amelia.
This acquisition positions SoundHound to penetrate new industries and enhance its presence across hundreds of enterprise brands in the $140 billion conversational AI market.
Earlier acquisitions, like SYNQ3 and Allset, have boosted its standing in the restaurant sector and voice commerce ecosystem. For instance, SoundHound’s voice AI solutions have been deployed by seven of the top 20 quick-service restaurants (QSRs).
Strategic partnerships fuel expansion in key markets
SoundHound’s ongoing partnership with automotive giant Stellantis (NYSE: STLA) strengthens its market reach, especially as its generative AI voice assistant powers vehicles from Alfa Romeo to Peugeot in Europe and Japan, with a U.S. rollout expected soon.
Collaborations with Nvidia’s (NASDAQ: NVDA) automotive platform further enhance its technological offerings, enabling in-vehicle voice assistants to operate even without internet access.
Notably, Nvidia disclosed earlier this year that it owns approximately 1.7 million shares of SoundHound, representing a 0.5% stake in the company.
Challenges and competitive pressures
Despite SoundHound’s impressive trajectory, it faces hurdles on its path to sustained profitability.
With a high valuation of 30.8 times its projected sales, the stock remains sensitive to market volatility.
Additionally, the company is yet to turn a profit, reporting a GAAP EPS loss of $0.06 and a non-GAAP EPS loss of $0.04.
While SoundHound has updated its revenue outlook, forecasting $82 to $85 million for 2024, it expects revenue to accelerate in 2025 with a projection of $155 to $175 million, signaling strong future growth potential.
However, competition in the voice AI market is fierce, with tech giants like Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN) dominating the space.
In this context, Finbold has leveraged ChatGPT-4o, to offer insights into how SOUN is likely to trade by year-end considering the key factors influencing SOUN’s future price trajectory.
ChatGPT-4o SOUN stock price prediction
Considering SoundHound’s recent developments and strong growth trajectory, ChatGPT-4o projects a price target of $9 for SoundHound’s stock by the end of 2024.
This target is supported by the company’s successful revenue diversification, high growth rate, and strategic acquisitions, which are expected to continue driving demand across multiple industries.
While challenges persist, SoundHound’s ongoing innovation and market expansion efforts position it for significant potential gains, making it a compelling option for investors looking to capitalize on the burgeoning AI market.
Featured image via Shutterstock
